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Amazon to Release $50 Tablet

Amazon.com has struggled to draw customers to its pricier tablets. So it’s going further down-market.

The Seattle online retailer plans to release a $50 tablet with a 6-inch screen, in time for this year’s holidays, according to people familiar with the matter. That would make it one of the least-expensive tablets on the market and half the price of the company’s current Fire HD 6-inch tablet.

The move would potentially attract buyers looking for a simple—and effectively disposable—device for straightforward tasks like streaming video at home and shopping on Amazon.com. But such inexpensive tablets typically come with compromises like inferior screen quality, durability or battery life in comparison to more expensive tablets like Amazon’s larger Fire tablets and industry-leading devices like Apple Inc. ’s iPad. For instance, the $50 device will have a mono speaker, rather than stereo, one of the people said.

The $50 device is part of a slate Amazon is planning to release this year that will also include tablets with 8-inch and 10-inch screens, according to the people familiar.

Amazon has long sought to undercut its hardware competitors, in part by eschewing profits on the devices themselves. Rather, Chief Executive Jeff Bezos has said, the company prefers to make money by selling services that work with the devices, like e-books and video rentals.

Mr. Bezos had set an internal goal of the $50 price tag for versions of both the Fire tablet and Kindle e-reader, viewing the rock-bottom prices as a crucial lure for a more cost-conscious group of buyers, the people said. But the e-reader screen technology from its vendors ultimately proved too expensive to drop the retail price, the people said. Amazon’s cheapest Kindle sells for $79.

“Will people tolerate a potentially inferior experience just because a tablet is $50?” said Frank Gillett, a Forrester Research analyst. “Amazon has to be very careful about what they’re giving up to get to that low price point.”